UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------
In the Matter of
NATIONAL FUEL GAS COMPANY SIXTH
NATIONAL FUEL GAS DISTRIBUTION CORPORATION CERTIFICATE
NATIONAL FUEL GAS SUPPLY CORPORATION PURSUANT TO
SENECA RESOURCES CORPORATION RULE 24
UTILITY CONSTRUCTORS, INC.
HIGHLAND LAND & MINERALS, INC.
LEIDY HUB, INC.
DATA-TRACK ACCOUNT SERVICES, INC.
NATIONAL FUEL RESOURCES, INC.
HORIZON ENERGY DEVELOPMENT, INC.
SENECA INDEPENDENCE PIPELINE COMPANY
NIAGARA INDEPENDENCE MARKETING COMPANY
UPSTATE ENERGY INC., F/K/A NIAGARA ENERGY TRADING INC.
File No. 70-9153
(Public Utility Holding Company Act of 1935)
- --------------------------------------------
THIS IS TO CERTIFY, pursuant to Rule 24, that certain transactions
proposed by National Fuel Gas Company ("National"), and its subsidiaries:
National Fuel Gas Distribution Corporation ("Distribution Corporation"),
National Fuel Gas Supply Corporation ("Supply Corporation"), Seneca Resources
Corporation ("Seneca"), Utility Constructors, Inc. ("UCI"), Highland Land &
Minerals, Inc. ("Highland"), Leidy Hub, Inc. ("Leidy"), Data-Track Account
Services, Inc. ("Data-Track"), National Fuel Resources, Inc. ("NFR"), Horizon
Energy Development, Inc. ("Horizon Energy"), Seneca Independence Pipeline
Company ("SIP"), Niagara Independence Marketing Company ("NIM"), and Upstate
Energy Inc., formerly known as Niagara Energy Trading Inc. ("Upstate")
(collectively, the "Subsidiaries"), in their Application-Declaration on Form
U-1, as amended, ("Application-Declaration")in SEC File No. 70-9153, have been
carried out in accordance with the terms and conditions, and for the purposes as
represented by said Application-Declaration, and the Order of the Securities and
Exchange Commission ("Commission") (HCAR No. 35-26847 dated March 20, 1998) with
respect thereto.
<PAGE>
1. EXTERNAL FINANCING BY NFG
-------------------------
a. Short-term Debt
BORROWING BY NATIONAL
National borrowed funds to be used for its own corporate purposes by
issuing commercial paper and/or short-term notes (in all cases having maturities
of no more than 270 days) to banks or other financial institutions during the
quarter ended June 30, 1999 ("Quarter"):
<TABLE>
---------------------------------------------------------------------------
<CAPTION>
At Beginning At End Maximum Level Minimum Level
of Quarter of Quarter of Such Short-term Debt of Such Short-term Debt
---------- ---------- ----------------------- -----------------------
<S> <C> <C> <C>
$11,000,000 $25,700,000 $31,000,000 $11,000,000
</TABLE>
b. Long-term securities
(1) Long-Term Debt Securities; Preferred Stock
During the Quarter, National did not sell any long-term debt securities
(i.e. debt with maturities in excess of 270 days).
(2) Stock Issuance Plans
During the Quarter, National issued the following shares of common
stock through the following plans ("Stock Issuance Plans"):
<TABLE>
<CAPTION>
Number of Number of Shares Exchanged as
Name Of Plan Shares Issued Consideration for Share Issuances
- ------------ ------------- ---------------------------------
<S> <C> <C>
Customer Stock Purchase Plan 8,831 N/A
Dividend Reinvestment and Stock 31,886 N/A
Purchase Plan
Tax Deferred Savings 32,545 N/A
Plans [401(k)]
Retainer Policy for 700 N/A
Outside Directors
1997 Award & Option Plan 2,000 - 0 -
<PAGE>
1993 Award and Option Plan 23,350 - 0 -
1984 Stock Plan 9,000 2,085
1983 Incentive Stock Option Plan 7,850 2,326
Total Number of 116,162 4,411
Shares Issued/Exchanged
Net New Shares 111,751
</TABLE>
Aggregate Consideration received upon issuance of 116,162 shares: $4,379,400.28.
The purpose of National's Customer Stock Purchase Plan and its Dividend
Reinvestment and Stock Purchase Plan is to promote the long-term ownership of
National's common stock by allowing for the purchase thereof directly from
National, through cash purchases and through reinvestment of cash dividends.
The purpose of National's two Tax-Deferred Savings Plans is to
encourage employees of National and of its Subsidiaries to provide for their
retirement needs by providing opportunities for long-term capital accumulation,
to promote ownership of National's common stock among employees, to provide an
attractive employee benefit, and to keep National's employee benefit program
competitive with programs offered by other corporations.
The purpose of National's Retainer Policy for outside directors is to
pay outside directors a portion of their annual retainer in common stock of
National. This promotes the long-term ownership of National's common stock by
outside directors.
National adopted its four award and option plans in order to attract,
retain and motivate key employees of outstanding ability. These plans were
intended to provide an incentive to key employees to maximize the long-range
profits, revenues, and financial integrity of National by increasing the
personal stake of those employees in the continued success and growth of
National, and by providing significant incentives to their continuation of
employment at National and its Subsidiaries.
On June 17, 1999, the Compensation Committee of the Board of Directors
of National awarded stock options pertaining to 10,200 shares of National's
common stock pursuant to the National Fuel Gas Company 1993 Award and Option
Plan and 127,000 shares of National's common stock pursuant to the National Fuel
Gas Company 1997 Award and Option Plan. The Compensation Committee did not award
any Stock Appreciation Rights or shares of Restricted Stock.
(3) Compliance With Parameters Concerning Long-Term Securities
<PAGE>
During the Quarter, all long-term debt of National had bond ratings of
"investment grade", and National's common equity (as reflected in its Form 10-Q)
did not fall below 30% of National's consolidated capitalization.
c. Hedging Transactions
During the Quarter, National did not enter into any hedges or other
derivative transactions either pursuant to a Hedge Program or an Anticipatory
Hedge Program.
d. Other Securities
During the Quarter, National did not issue other types of securities
("Other Securities").
2. MONEY POOL
----------
During the Quarter, National coordinated the borrowing requirements of
Subsidiaries through the system money pool ("Money Pool"). Money Pool activities
included:
a. National sold commercial paper during the Quarter, through Merrill
Lynch Money Markets, Inc. and/or Chase Securities, Inc. The proceeds were loaned
by National to certain Subsidiaries either directly or through the Money Pool
during the Quarter.
Commercial Paper Outstanding
------------------------------------------------------------------
Maximum Amount Minimum Amount
At Beginning At End Outstanding During Outstanding During
of Quarter of Quarter Quarter Quarter
---------- ---------- ------- -------
$150,000,000 $132,500,000 $150,000,000 $79,400,000
b. National issued short-term notes to banks or other financial
institutions during the Quarter. The proceeds thereof were loaned by National to
certain Subsidiaries that borrowed through the Money Pool during the Quarter.
National's External Bank/Financial Institution Borrowings Outstanding
(Money Pool)
---------------------------------------------------------------------
Maximum Amount Minimum Amount
At Beginning At End Outstanding During Outstanding During
of Quarter of Quarter Quarter Quarter
---------- ---------- ------- -------
$196,000,000 $192,800,000 $196,000,000 $114,700,000
c. The maximum aggregate amount of external short-term debt borrowed by
National (for its own use and for the Money Pool) at any time during the Quarter
was $346,000,000, and the maximum aggregate amount that National and its
Subsidiaries lent to other Subsidiaries participating in the Money Pool at any
time during the Quarter was $390,800,000.
<PAGE>
d. The following table lists cash balances that National and certain
Subsidiaries (i.e., Subsidiaries with surplus funds) loaned to other
Subsidiaries that borrowed through the Money Pool during the Quarter:
Cash Balances Loaned Through the Money Pool
---------------------------------------------------
At Beginning At End
of Quarter of Quarter Maximum Minimum
---------- ---------- ------- -------
National $36,700,000 $41,500,000 $42,200,000 $36,700,000
Distribution 0 0 25,300,000 0
Supply 0 0 0 0
Seneca 14,300,000 13,900,000 16,500,000 13,900,000
UCI 400,000 200,000 400,000 200,000
Highland 0 0 0 0
Leidy 700,000 700,000 700,000 700,000
Data-Track 700,000 600,000 700,000 600,000
NFR 0 1,300,000 4,700,000 0
Horizon Energy 100,000 500,000 5,400,000 0
SIP 0 0 0 0
NIM 0 0 0 0
Upstate 0 0 0 0
e. The following table lists cash balances that certain Subsidiaries
borrowed through the Money Pool during the Quarter. National does not borrow
from its Subsidiaries through the Money Pool or otherwise.
Borrowings from the Money Pool
---------------------- -------------------------------
At Beginning At End Maximum Minimum
of Quarter of Quarter Borrowed Borrowed
---------- ---------- -------- --------
Distribution $ 53,700,000 $ 11,700,000 $ 53,700,000 $ 0
Supply 57,700,000 46,800,000 66,300,000 44,100,000
Seneca 263,500,000 263,400,000 274,800,000 256,100,000
UCI 0 0 0 0
Highland 3,600,000 50,900,000 50,900,000 3,400,000
Leidy 0 0 0 0
Data-Track 0 0 0 0
NFR 9,700,000 0 9,700,000 0
Horizon Energy 0 0 0 0
SIP 9,300,000 9,500,000 9,500,000 9,300,000
NIM 0 0 0 0
Upstate 1,400,000 2,400,000 2,400,000 1,300,000
3. USE OF PROCEEDS
---------------
National has used the proceeds of the aforementioned issuances of
short-term debt, and the borrowing Subsidiaries have used the proceeds of their
Money Pool borrowings, for acquisitions, capital expenditures, working capital
needs, for the retirement or redemption of securities, or for other general
corporate purposes.
<PAGE>
4. EXTERNAL FINANCING BY DISTRIBUTION
----------------------------------
During the Quarter, Distribution did not engage in external financing
except for the execution of a $1.634 million Installment Sales Agreement with a
vendor in connection with the purchase of new computer software and related
maintenance services.
5. FINANCING ENTITIES
------------------
During the Quarter, National and its nonutility Subsidiaries did not
organize new corporations, trusts, partnerships or other entities created for
the purpose of facilitating financing.
6. GUARANTEES BY NATIONAL
----------------------
During the Quarter, National made guarantees on behalf of its
Subsidiaries in the aggregate amount of $15,750,000. The maximum amount of
guarantees or credit support that National had outstanding to its Subsidiaries
at any time during the quarter was $155,310,000.
All guarantees relate to gas transportation, purchases or sales, or
other credit support agreements relating to the Subsidiaries' existing
businesses.
7. ACQUISITIONS OF EWG'S, FUCO'S AND RULE 58 COMPANIES
---------------------------------------------------
Except as set forth in the following sentence, during the Quarter,
neither National nor any of its Subsidiaries made any investments in entities
that had been designated as electric wholesale generators (EWG's) or foreign
utility companies (FUCO's) at such time, and neither National nor any of its
Subsidiaries made any investments in energy-related companies and gas-related
companies under Rule 58. In June, in exchange for $20,000.00 National acquired
all of the shares of NFR Power, Inc., a new subsidiary which has been designated
as an EWG by the Federal Energy Regulatory Commission.
The aggregate investment of National and its subsidiaries in EWG's and
FUCO's does not exceed the limits set forth in the Commission's Rule 53.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this First Certificate
Pursuant to Rule 24 to be signed on their behalf by the undersigned thereunto
duly authorized.
NATIONAL FUEL GAS COMPANY
By: /s/ P. C. Ackerman
------------------------------------
P. C. Ackerman
President
<PAGE>
NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
By: /s/ D. F. Smith
------------------------------------
D. F. Smith
President
SENECA RESOURCES CORPORATION
By: /s/ J. A. Beck
------------------------------------
J. A. Beck
President
NATIONAL FUEL GAS SUPPLY CORPORATION
By: /s/ R. Hare
------------------------------------
R. Hare
President
NATIONAL FUEL RESOURCES, INC.
By: /s/ R. J. Kreppel
------------------------------------
R. J. Kreppel
President
UTILITY CONSTRUCTORS, INC.
By: /s/ J. A. Beck
------------------------------------
J. A. Beck
President
HORIZON ENERGY DEVELOPMENT INC.
By: /s/ P. C. Ackerman
------------------------------------
P. C. Ackerman
President
HIGHLAND LAND & MINERAL, INC.
By: /s/ J. A. Beck
------------------------------------
J. A. Beck
President
<PAGE>
DATA-TRACK ACCOUNT SERVICES, INC.
By: /s/ P. C. Ackerman
------------------------------------
P. C. Ackerman
President
LEIDY HUB, INC.
By: /s/ W. E. DeForest
------------------------------------
W. E. DeForest
President
SENECA INDEPENDENCE PIPELINE COMPANY
By: /s/ R. Hare
------------------------------------
R. Hare
President
NIAGARA INDEPENDENCE MARKETING COMPANY
By: /s/ C. H. Friedrich
------------------------------------
C. H. Friedrich
Treasurer
UPSTATE ENERGY INC.
By: /s/ C. H. Friedrich
------------------------------------
C. H. Friedrich
Treasurer
Dated: August 19, 1999
